Will Facebook be dead in 15 years? – Two factors affecting the growth of social networks

A network effect occurs when the value of a product or service is dependent on the number of others using it. Thus, digital social network effects occur on large poker sites, on Second Life, or on a server where people play online games together. ICQ was an early form of social network. You were connected to your friends, family members, colleagues, etc. You could share messages, files, and at the time it was pretty neat! You were there because all your friends were there, and people would join to be able to talk with their friends. Thus network effects exhibit an amplification effect or a positive feedback loop that fuels growth. But this amplification effect also applies in the opposite direction, and can turn into a negative feedback loop. When your friends leave, there is not much point to stay, so you leave too. This is exactly what happened to ICQ. It was the dominant player. It had better features than MSN [Messenger]. An obvious one was that you could still message contacts when they were offline (they would get the message when they connect). If I recall correctly, originally in MSN you could not message contacts when they were offline. But the trend begun and people started to migrate to MSN, possibly because it was newer, had a nicer interface, or was simply perceived as ‘cooler’. I preferred ICQ but at some point I left too because all my friends were now on MSN. This amplification on the upside as well as the downside is analogous to leverage. Myspace was also subjected to it. Modern social networks like LinkedIn or Facebook are not immune to this effect.

However, there is another effect that needs to be considered to assess the potential downfall of social networks. I would call it invested social or data capital. In Facebook, that would be all your photos, posts, etc. In World of Warcraft that would be your character, the inventory you amassed, and all the hours you spent to bring it to level 100 (or the money invested to have a Chinese do it for you…). The most potent example of invested data capital would be Wikipedia. I doubt that there would be a second Wikipedia. So this invested capital constitutes a barrier to exit for users. In ICQ and MySpace this barrier was low. Modern social networks have higher barriers, but not completely unsurmountable. Clearly, it would lose its strength if one could easily recuperate the invested data, but the social capital will remain. For example in LI, it would be easy to copy all the text in your profile. When you have 20 connections it would also be easy to reconnect. But when you have 600 it’s another matter. But, I could conceive that a new incumbent could reconnect you with your 600 contacts if it has access to this information. And what about all the posts you made to show off and increase your professional credibility? I guess that your professional credibility would follow you wherever you may go…

Will Facebook be dead in 15 years? I think that the probability is quite small. But will FB and LI still be the dominant players and be much larger than today? This of course I can’t tell… But my feeling is that people overestimate their competitive barriers. The network effect can play for you but also against you when people start to leave. Data capital can be transferred. Social capital in part follows you. And users may, in some circumstances, simply consider invested social and data capital as sunk costs and move on to better or ‘cooler’ alternatives, subject to fashion trends. It is already happening. 

To stay relevant, current dominant players in social media will have to find ever new ways and features to entice people to stay, and at the same time increase barriers to exit for users. As for me, I fondly remember ICQ, but nowadays Messenger has been supplanted by Skype and Google Hangouts. Nothing is eternal in the realm of high technology…

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